Despite the allure of the Chinese market for many U.S. businesses, deciding whether to enter China needs to be considered from many angles before taking the leap forward — at least that was the general consensus from a group of China experts participating in the American Institute of Certified Public Accountants International Business Conference, held at The Roosevelt Hotel in New York. Among key themes of that conversation, which I moderated:
Prepare to work closely with government
Understanding that doing business in China means doing business with a heavy-handed government is one prerequisite to forming a Chinese-entry strategy, said Clifford Gibbons, who has advised Kellogg and other companies on their Chinese-entry strategies.
Chris Siddall said a well-informed entry strategy should reflect a holistic view of all factors that could affect a business, including partner assessment, regulatory framework and local customs and regulations.
Companies should explore working with the U.S. government and its resources because that can mean getting to the right Chinese government official efficiently, said David Kornbluth, a former State Department intelligence officer in China.
Determine the right corporate structure
You need to figure out what type of corporate entity would be best suited to minimize taxes and make exiting, if necessary, easier, said Payson Peabody, an international tax and trade lawyer at Dykema Gossett. Peabody and Jing S. Vivatrat, chief operating officer of American Learning Network, a Washington, D.C., consultancy on China, discussed corporate forms that would be suitable in the country, including an equity joint venture of a wholly owned foreign investment entity.
Protect your brand and intellectual property rights
Eric Fingerhut, also of Dykema Gossett, and Christopher Shaowei, who is in Shanghai and represents NTD Patent and Trademark Agency, emphasized naming strategies and the importance of having strong corporate and intellectual property legal representation.
Karl Engkvist, chief operating officer of global education company Campus Direct and a former executive at leading education-software provider Blackboard, summed up best what it means to do business in China when he described choosing between a Harvard MBA-run private partner and the Chinese Ministry of Education in establishing a joint venture. “The ministry was already everywhere we wanted to be and could pull the right levers, so we went with them,” Engkvist said.
The main take-away might come from China’s legendary head of state Deng Xiaoping: “It doesn’t matter if the cat is black or white, as long as it catches mice.”